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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Aug 30, 2022

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Atul Question by Atul on Aug 30, 2022Hindi
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Please review my MF portfolio below & share your suggestions on making changes. Goal is to get a corpus after 10 years for Child education.

SIP:

  • Edelweiss Balanced Advantage Fund Direct-Growth - (SIP 2000)
  • Edelweiss Mid Cap Direct Plan-Growth - (SIP 2000)
  • Axis Bluechip Fund Direct Plan-Growth - (SIP 500)

Lump sum:

Canara Robeco Small Cap Fund Direct - Growth - (One time 5000)

Ans: Both modes SIP and Lumpsum are in good schemes

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8333 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

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I’m investing in following MF’s 1. Axis Focused 25 Fund – 5000 /months and 10% yearly Step up 2. Axis Long Term Equity Fund – 5000/ month and 10% yearly Step up 3. Axis Small Cap Fund – 5000/ month and 10% yearly Step up 4. Mirae Asset Emerging Bluechip Fund – 2500/ month 5. Mirae Asset Mid Cap Fund – 5000/ month and 10% yearly step up 6. Parag Parikh Flexi Cap Fund – 5000/ month My investment horizon is 15 years , moderately high risk appetite with focus on maximum Corpus Build. Kindly advice if my portfolio needs any change ? Thanks.
Ans: You've built a diversified mutual fund portfolio with a focus on different market caps and investment styles, which is commendable. Given your investment horizon of 15 years and a moderately high-risk appetite aiming for maximum corpus build, let's evaluate your portfolio.

Portfolio Overview:

Focused Equity Funds:
Axis Focused 25 Fund: Concentrates on a limited number of stocks.
Axis Long Term Equity Fund: Focuses on tax-saving with a lock-in period.
Small & Mid Cap Funds:
Axis Small Cap Fund, Mirae Asset Emerging Bluechip Fund, Mirae Asset Mid Cap Fund: These funds invest in smaller to mid-sized companies with higher growth potential but also higher volatility.
Flexi Cap Fund:
Parag Parikh Flexi Cap Fund: Offers flexibility to invest across market caps, sectors, and themes.
Analysis and Recommendations:

Diversification:
Your portfolio is well-diversified across large-cap, mid-cap, and small-cap segments, which is good for long-term growth.
Concentration Risk:
Having multiple funds managed by the same fund house (Axis and Mirae Asset) can lead to concentration risk. Consider diversifying across fund houses to reduce dependency on a single fund manager's strategy and performance.
Focused Funds:
Both Axis Focused 25 Fund and Axis Long Term Equity Fund focus on a limited number of stocks. While they can offer higher returns, they can also be riskier due to concentration.
Step-Up SIPs:
Your strategy of increasing SIP amounts by 10% annually is excellent for leveraging the power of compounding and adjusting for inflation.
Recommendations:

Consolidation:
Consider consolidating your investments by reducing the number of funds and ensuring each fund adds unique value to your portfolio. This can simplify monitoring and reduce overlap.
Add a Debt Component:
Given your moderately high-risk appetite, consider adding a debt component to balance the portfolio and provide stability during market downturns. A Hybrid Equity Fund or a Dynamic Asset Allocation Fund can be suitable.
Review Tax Implications:
As Axis Long Term Equity Fund is a tax-saving fund (ELSS), ensure you're aware of the lock-in period and its implications on liquidity.
Regular Review with a Certified Financial Planner (CFP):
Given your specific goals and risk appetite, it's crucial to review your portfolio periodically with a CFP. They can provide personalized advice, monitor performance, and suggest necessary adjustments based on changing market conditions and your financial goals.
Conclusion:

Your current portfolio aligns well with your long-term investment horizon and risk appetite. However, consider consolidating and diversifying across fund houses to reduce concentration risk and add a debt component for balance. Regular reviews with a CFP can ensure your portfolio remains aligned with your financial goals and market dynamics. Always remember, a well-diversified portfolio tailored to your risk profile and goals can help you navigate the market's ups and downs, aiming for long-term wealth creation.

..Read more

Ramalingam

Ramalingam Kalirajan  |8333 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 29, 2024

Asked by Anonymous - Apr 14, 2023Hindi
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Hello Learned Experts, I am a new MF investor; I would like to build a corpus of 2 Crores in the next 5 Yrs. I am currently investing 45000/- through monthly SIPs (open to double this contribution). I solicit your feedback, advice & recommendations to add/change this portfolio towards my goal. Axis Midcap Fund-Reg(G) 4,500 Mirae Asset Emerging Bluechip-Reg(G) 2,500 Nippon India Small Cap Fund(G) 4,500 PGIM India Midcap Opp Fund-Reg(G) 4,500 Aditya Birla SL Flexi Cap Fund(G) 4,500 Aditya Birla SL India GenNext Fund(G) 4,500 ICICI Pru Bluechip Fund(G) 4,500 ICICI Pru Value Discovery Fund(G) 4,500 Kotak Equity Opp Fund(G) 4,500 Parag Parikh Flexi Cap Fund-Reg(G) 4,500 Thanks, and regards, Arun
Ans: Building a Corpus for Your Dreams: Feedback on your SIP Portfolio
Hi Arun,

I appreciate you reaching out! It's fantastic that you're a new investor starting your journey towards a Rs. 2 crore corpus in five years. That's a commendable goal, and SIPs are a smart way to get there. Let's dive into your current portfolio and see how we can fine-tune it for your needs.

Current Portfolio Analysis:

Diversification: You've chosen a mix of funds across different market capitalizations (Large, Mid, and Small Cap). This is a good starting point for diversification, but ten funds might be a bit too many to manage effectively.

Fund Overlap: There might be some overlap between these funds in terms of the stocks they invest in. This can dilute the diversification benefit.

Risk and Your Time Horizon: Five years is a relatively short time frame for aggressive investment strategies. Some of these funds might carry higher risk.

Here are some suggestions to consider:

Reduce the number of funds: Aim for 4-5 well-diversified funds across market capitalizations. This simplifies tracking and rebalancing.

Focus on Actively Managed Funds: Actively managed funds, where experienced fund managers make investment decisions, can potentially outperform the market over time. Consider consulting a Certified Financial Planner (CFP) to help you choose these funds.

Regular vs. Direct Plans: Regular plans with an advisor can provide valuable guidance, especially for new investors. They can help you choose funds, understand your risk profile, and stay on track with your goals. While direct plans offer a lower expense ratio, the advisor's role can be crucial in your investment journey.

Considering your goal and risk tolerance, a possible approach could be:

2 Large-Cap Funds: These provide stability and good growth potential.

1 Mid-Cap Fund: Offers the chance for higher returns but with more volatility.

1 Flexi-Cap Fund: Gives the fund manager the flexibility to invest across market capitalizations based on market conditions.

Remember, this is a general guideline. Consulting a CFP can help you create a personalized portfolio based on your specific risk appetite and financial goals.

Taking it Forward:

Review Regularly: Meet with your CFP periodically to review your portfolio and adjust it as needed based on market conditions and your life goals.

Increase SIPs if Possible: If your income allows, consider gradually increasing your SIP amount to reach your target corpus faster.

Stay Disciplined: Market fluctuations are normal. Don't panic and redeem your investments during downturns. Stay focused on your long-term goals.

Building a Rs. 2 crore corpus in five years is ambitious, but with a well-diversified portfolio, regular investments, and professional guidance, you can increase your chances of success.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8333 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 18, 2024

Asked by Anonymous - Apr 18, 2024Hindi
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Hi sir, I'm 25y old. I've started investing on May 2022 in mutual funds through SIP for long term 25-30years. Right now I've 45k of invested amount in MF Portfolio. I've emergency fund in FD of 60k and I've health and term insurance for me and family. My MF portfolio: Parag Parikh flexi cap - 2.5k Nippon small cap - 2k Axis bluechip - 1k Navi nifty50 index fund -500 And I'm planning to add zerodha largemidcap 250 index fund. Can you please review my portfolio and any suggestions on changes?
Ans: You've made a solid start by investing in mutual funds through SIPs at a young age with a long-term horizon. Your financial planning approach, including having an emergency fund and insurance coverage, is commendable. Let's review your MF portfolio:

Diversification: Your portfolio consists of flexi cap, small cap, bluechip, and index funds, providing a good mix across market caps and investment styles.
Flexi Cap: Parag Parikh flexi cap fund offers flexibility across market caps and geographies, suitable for long-term growth.
Small Cap: Nippon small cap fund provides exposure to smaller companies with high growth potential, though small caps can be more volatile.
Large Cap: Axis bluechip and Navi nifty50 index fund focus on established large-cap companies, offering stability and growth potential.
Index Fund: Zerodha largemidcap 250 index fund aims to replicate the performance of the top 250 companies by market cap, providing diversification across large and mid-cap segments.
Suggestions:

Continue SIPs: Continue with your SIPs to benefit from rupee cost averaging and the power of compounding over the long term.
Review and Rebalance: Periodically review your portfolio to rebalance if any fund deviates significantly from its intended allocation.
Asset Allocation: As you add more funds, consider maintaining a balanced asset allocation based on your risk tolerance. Ensure you're not overly concentrated in one segment.
Monitor Performance: Keep an eye on the performance of your funds. If any fund consistently underperforms its benchmark or peers, consider re-evaluating its place in your portfolio.
Emergency Fund: Ensure your emergency fund remains intact and consider increasing it over time to cover 3-6 months of living expenses.
Professional Advice: Given your long-term investment horizon, consider consulting a certified financial planner to fine-tune your investment strategy, align it with your goals, and ensure optimal diversification.
Overall, your portfolio is off to a good start. With disciplined investing and periodic reviews, you're on track for long-term wealth creation. Keep up the good work!

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8333 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 12, 2025

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i wish to purchase new car i10, should i purchase the same through own money or should i take a vehicle loan from bank and the money own by my to be kept as FDR or liquid mutual fund
Ans: It’s a good sign that you’re thinking before buying a car. You’re not rushing into it. That shows maturity and smart thinking.

We will now evaluate own money vs vehicle loan — from every angle.

 

Understanding the Nature of a Car Purchase
A car is not an investment.

 

It is a consumption asset, not a growth asset.

 

It depreciates every year. Its value goes down, not up.

 

So the cheaper the total cost, the better for your wealth.

 

Option 1: Use Own Money Fully
Pros

No interest cost. You save on total expenses.

 

You are free from monthly EMI pressure.

 

Car becomes fully yours from day one.

 

No need to deal with bank, forms, hypothecation etc.

 

Cons

Your liquid money reduces.

 

You may not have enough cash for emergencies.

 

Opportunity loss if you had invested that money.

 

Option 2: Take Vehicle Loan & Keep Own Money in FDR or Liquid Mutual Fund
Let’s evaluate this with care.

Vehicle Loan Pros

You can preserve your savings for emergencies.

 

EMI can be budgeted monthly, if income is stable.

 

Some banks offer competitive interest rates.

 

Vehicle Loan Cons

You will pay interest on a depreciating item.

 

Loan adds to your monthly obligations.

 

You must pay insurance, EMI, fuel, and service together.

 

FDR and Liquid Mutual Funds give lower returns than loan cost.

 

So you will likely lose more in interest than you gain.

 

Let's Compare: Interest Rate vs Investment Return
Vehicle loan interest is usually 9% to 11% per year.

 

FDR gives around 6% to 7% before tax.

 

Liquid mutual funds give 6% to 7.5% on average.

 

So you pay more to the bank than you earn from investment.

 

Tax on interest or gains reduces actual return further.

 

This means taking a car loan and investing your own money leads to net loss.

 

Best Option for You: Smart Compromise Approach
Let me share a wise solution.

 

Don’t use full own money. Don’t take full loan either.

 

Instead, pay 70–80% from own funds.

 

Take a small car loan for the remaining 20–30% only.

 

This keeps EMI low and retains some liquidity.

 

You reduce interest cost and also keep Rs.50,000–Rs.1 lakh aside.

 

Park that in liquid fund for any urgent need.

 

Repay this small loan fast in 1–2 years.

 

Only Take a Car Loan If:
Your job income is stable.

 

You already have 3–6 months emergency fund ready.

 

You don’t have big loans running now.

 

You can pay EMI without affecting savings.

 

You commit to close the loan early.

 

Avoid This Mistake:
Never buy a more expensive car because loan makes it “feel affordable.”

 

Loan should not expand your car budget.

 

Whether you buy with loan or cash, pick a simple car within limits.

 

i10 is a wise, middle-ground choice. Good thought.

 

Tax Angle (If Business Use)
If you are using the car for business, vehicle loan interest may be tax-deductible.

 

But for personal use, there is no tax benefit.

 

So do not take loan just for imagined tax saving.

 

Final Insights
A car is a need, not an investment.

 

Using your own money fully keeps things simple and cheap.

 

Taking a full car loan and investing the money gives net negative return.

 

Best option is a split approach — pay major part from own funds.

 

Take small loan only if needed and close it early.

 

Always keep emergency money aside before buying.

 

Avoid emotional buying or overbudget cars.

 

Your financially balanced approach is very appreciable.

 

Best Regards,
 
K. Ramalingam, MBA, CFP,
 
Chief Financial Planner,
 
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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